Ultimate Guide to Wellness Stipends for Employee-First Companies

Few positives came out of the global pandemic, but increased awareness of employees’ health and well-being was one of them. The global health crisis forced HR leaders to become overnight experts in psychological health and find creative ways to support their workforce, both inside and outside of the office. 

One popular strategy was for employers to offer wellness stipends as part of their benefits package. This guide outlines the main benefits of investing in wellness programs, what to include in your wellness stipend, and how to design a successful program that supports your entire workforce. 

What is a wellness stipend?

A wellness stipend is a benefit paid to employees to cover healthy living and wellness-related expenses. The aim of this allowance is to fund an assortment of physical and mental health services that support each employee’s unique wellness journey at any stage in their life and career. 

How does a wellness stipend work?

Here’s how the wellness stipend model works from both the employee and employer perspectives. 

For employees 

Employees receive a stipend allowance on a set schedule, such as monthly, quarterly, or annually, which they can spend at any time. Some employers may prescribe a “use it or lose it” condition while others will allow any unused stipend funds to roll over from one month to the next. 

Employees spend their allowance on eligible wellness expenses, such as fitness memberships, mental health apps, or nutrition services, and either pay directly with a company-issued card or cover the cost out of pocket and submit a receipt for reimbursement along with any required documentation. Once approved, the purchase is deducted from their balance.

For employers 

On the employer side, a wellness stipend is essentially a budget line item to structure and administer effectively. 

Employers determine the stipend amount, frequency of distribution, and eligible expense categories, then select the infrastructure to deliver it, such as through payroll, prepaid cards, or a benefits platform. They’re also responsible for handling compliance and tax reporting, so stipends are classified correctly as taxable income. 

Clear communication and straightforward policies are critical, since employees need to understand how the stipend works and what documentation is required. Finally, employers monitor participation and spending patterns to confirm the program is running smoothly and make adjustments if administrative challenges arise.

Is a wellness stipend taxable?

Yes, a wellness stipend is considered taxable income for employees because it doesn’t qualify as a tax-advantaged health benefit under IRS rules. This means any amount employees receive through a stipend is subject to standard income and payroll taxes, just like regular wages.

For example, if an employee receives a $100 monthly wellness stipend, the actual take-home value might be closer to $70 or $80 depending on their individual tax bracket. On the employer side, that same $100 is still fully deductible as a business expense, but the company must also pay its share of payroll taxes on the stipend amount.

Key benefits of wellness stipends for employers and employees

Offering wellness reimbursement or stipend plans has distinct advantages for both employers and employees. Here’s what each party can expect when they’re implemented thoughtfully. 

Benefits of wellness stipends for employers

Stipends are easier to manage 

Wellness stipends streamline administration for benefits teams, giving them more capacity to focus on strategic initiatives. Instead of HR teams having to liaise with multiple wellness providers, stipends let employees choose what works for them within a defined budget. 

Stipends increase employee engagement and productivity

Emerging research shows that when employees trust their employer and feel genuinely cared for, the benefits are measurable. MetLife’s 2025 Employee Benefit Trends Study reports that employees who trust their employer are 2.4x more likely to feel engaged, 1.9x more likely to feel productive, and 3.8x more likely to feel holistically healthy.

Nadia Harris, Founder of Remote Work Advocate, explains that building a supportive workplace that focuses on well-being isn’t rocket science—it’s about listening to what employees need: 

“It’s not a modern office or free Friday cocktails that improve productivity, engagement, and retention. Just provide people with workplace flexibility and care about their everyday needs. That’s how you’ll build a genuine company culture everyone will commit to.” 

Stipends reduce absenteeism and healthcare costs 

The U.S. workforce continues to grapple with absenteeism. In 2024, data from the Bureau of Labor Statistics shows that full-time wage and salary employees had an absence rate of 2.6% due to illness or injury, and their lost work-time rate stood at 1.3%. Employees who are supported holistically are 74% more likely to be resilient, meaning they’ll bounce back from minor illnesses and take fewer unplanned days off. 

Stipends boost employee retention 

An attractive wellness stipend has the power to attract and retain top talent. Kelly Tucker,  Managing Director of HR Star, breaks down how the recruitment landscape has changed to match employee demand.  

“Anyone working in recruitment will tell you that people’s expectations have massively changed. If you’re not an employer being transparent about looking after your people, you will not be able to attract and retain the best. People have a basic expectation that their employer will care about and have access to platforms that enable them to be well.” 

This is an initiative that will pay off in the long term. Nectar HR confirms that offering the right mix of benefits is the top reason that employees remain loyal to their employer, with 81.6% of employees choosing this as a reason to stay. 

Benefits of wellness stipends for employees 

Stipends improve employee health and well-being 

In 2025, 75% of U.S. workers reported experiencing physical or emotional symptoms of stress, a sustained rise driven by economic uncertainty, social unrest, and personal financial strain.

Additionally, the APA’s Work in America survey found that 54% of workers identify job insecurity as a significant contributor to stress, emphasizing the need for employer-supported wellness initiatives that manage workplace and external pressures.

Companies offering wellness stipends support their employees in handling these large-scale threats and enable them to access services or activities important to their physical and mental well-being. A well-rounded package includes access to fitness services; this is important because studies find that exercise improves self-esteem and cognitive function. 

Stipends grow with the employee 

Unlike static perks that lose relevance over time, stipends adapt to employees’ changing needs and life stages. A new hire might use their allowance for a gym membership, while a working parent could put it toward mindfulness apps or family nutrition programs. As employees progress in their careers and personal lives, the stipend continues to provide value by meeting them where they are. This flexibility makes the benefit more meaningful over time. 

Wellness stipends vs. healthcare stipends vs. standalone HRAs

Choosing between wellness stipends, healthcare stipends, and standalone health reimbursement arrangements depends on your goals, budget, and compliance needs. Here’s how the main options stack up:

Successful types of wellness stipends

Tailor your wellness stipend program to your company culture and the needs of your employees by adding some of these popular stipends to your package.

Read up on other stipends that can complement a WFH stipend and further support employee well-being:

• Meal Allowance
• Travel Stipends Guide
• Home Stipends
• Cell Phone Stipend
• Gas Stipends
• Childcare Benefits
• Fertility Benefits
• Employee Rewards and Recognition Programs
• Professional Development Stipends
• Family Forming Benefits
• Commuter Benefits
• Technology Stipends

Fitness stipends

Physical health and exercise benefits can be something other than the on-site corporate gym memberships you’d associate with enterprise employers. A modern-day fitness allowance includes access to: 

• Wearable fitness trackers such as smartwatches
• Fitness classes such as cardio, strength training, spinning, or yoga classes
• Apps and subscriptions for virtual workouts such as Peloton or Fitbit 
• Fitness equipment such as weights, mats, or athletic clothing  
• Personal training sessions for 1:1 exercise 

Example: Crisis Text Line worked closely with Benepass to develop a mental and physical health perks program, including meditation apps, fitness memberships, and athletic apparel.  

Mental health stipends 

Ensure your employees feel mentally balanced both inside and outside of work. Some of the following benefits will proactively protect psychological health, while others should be available when employees require extra support or are going through a crisis. 

• Telehealth services such as therapy sessions or psychiatrist consultations 
• Crisis helplines for 24/7 access to support 
• Mindfulness and meditation apps such as Headspace or Sleepio Wellness programs
• Online cognitive-behavioral therapy to develop coping mechanisms for issues with anxiety and addiction 
• Stress management programs to build resilience and help employees cope with day-to-day workplace pressures 

Example: Mindbody has built a wellness perk program called Be Well, which includes extensive mental health support such as therapy and counseling, apps, coaching, and relationship therapy.   

Nutrition stipends 

Support your employees in maintaining a healthy weight and following a nutritious diet. Motivate them to ditch the traditional office lifestyle of take-out breakfasts and lunches, opting instead for  fresher options:

• Meal delivery services like Hello Fresh, Blue Apron, and Sun Basket
• Vouchers for grocery delivery or local health food stores
• Membership cards for healthy eating restaurants
• Weight loss programs to track progress in a supportive environment 
• Health supplements or vitamins to bolster the immune system 

Example: Wix partnered with Benepass to provide an equitable food stipend covering meal delivery, groceries, weekly dinner subscriptions, and local restaurants.

Alternative therapy stipends 

Encourage your employees to focus on healing their bodies and minds through alternative therapies. Consider adding some of the following to your stipend: 

• Massage therapy to reduce tension, stress, and muscle pain 
• Holistic healing, such as energy work, reflexology, or Reiki
• Chinese medicine, such as acupuncture to decrease inflammation, fatigue, and mental stress 
• Ayurvedic remedies for a range of psychological and physical ailments   
• Chiropractic treatments to improve posture, physical performance, and mobility

Example: Seres Therapeutics worked with Benepass to personalize its perks program, adding a spa, beauty, and massage category alongside other mental health and nutritional wellness options. Matt Sanborn, Senior Manager of Benefits, explains: 

“People love having massages. That’s always something you want to get for yourself, but at the same time, you’re like, ‘Is that the best use of my money?’ When you have this bucket carved out that’s supposed to be used for things like that, people are more apt to do that.” 

Financial health stipends 

Financial insecurity is a significant source of stress. Many employees find it hard to concentrate on their daily work when living paycheck to paycheck, struggling to pay the bills, and feeling anxious about affording a comfortable retirement. Your financial wellness stipend might include:

• Financial education workshops to teach employees about their taxes, 401k options, and more 
• Digital financial education for access to online resources and robo-advisors at the touch of a button 
• Financial coaching for 1:1 contact with a Certified Financial Planner (CFP) to discuss individual circumstances 
• Budgeting apps linked to your bank accounts to easily track your incoming salary and outgoing expenses
• Student debt repayment so employees can pay down debt, reduce loan-related stress, and progress toward other financial goals 

Curious about the other types of stipends you can offer to employees? We put together a guide to employee stipends to provide an overview of this popular employee benefit and offer inspiration as you design your stipend program. Download the guide to learn about the types of stipends available and how to design a successful program.

Designing a successful wellness stipend program in 6 easy steps

There’s no one-size-fits-all approach to creating a wellness stipend. But there are some sensible steps you can take to develop a program that works for your employees’ evolving needs. 

1. Identify the wellness needs of your employees 

Recognize your employees as individuals. Understand that your workforce includes people of different races, genders, backgrounds, pay levels, family situations, and health requirements. Rather than prescribing set perks across the board, empower your employees by giving them access to the specific wellness benefit expenses they need. 

Example: Financial stress continues to be a major drag on employee productivity. According to BrightPlan’s 2024 Wellness Barometer Survey, employees report losing over 7 hours of productivity each week due to financial stress, a staggering figure that translates to approximately $183 billion in annual losses for U.S. businesses.

Run employee benefits surveys to determine the most important benefits to employees and craft your benefits around these results. 

2. Set your stipend budget 

The next step is to decide how much to provide and how often to provide it. Employers can structure stipends on a monthly, quarterly, semi-annual, or annual basis, and the cadence you choose will shape both employee experience and cash flow management. For example, a $600 annual stipend could be distributed as $50 per month or $150 per quarter. Defining this schedule upfront makes it easier for employees to plan their spending and for finance teams to forecast costs.

Because benefits typically make up around one-third of the average employee compensation package, it’s important to determine how much of that bucket to dedicate specifically to wellness in balance with health insurance, retirement contributions, and mandatory benefits.

As you establish your budget, consider:

• Unused benefits: How much money you’re currently wasting on perks employees don’t use
• Administrative costs: The resources needed to manage reimbursements or run a stipend platform
• Implementation fees: Any one-time costs of launching a new system
• Foreign exchange fees: Especially relevant for distributed teams
• Annual price increases: Build in a buffer for inflation or vendor cost hikes
• Employee forfeiture: Unused stipend dollars that roll back into your budget if employees don’t spend them

3. Select your program goals 

A successful wellness stipend program starts with clear goals. At its core, a stipend should give employees the freedom to define what “health” means to them at different stages of their lives, whether a gym membership, therapy sessions, meditation apps, or family nutrition programs. Employers can take this a step further by offering a lifestyle spending account (LSA), which expands flexibility by combining multiple lifestyle and wellness categories in a single, easy-to-manage benefit. 

Your goals should be both ambitious and achievable while in alignment with your company values. For example, your goals might be: 

• Improving employee engagement 
• Increasing access to health and wellness services 
• Reducing absenteeism 
• Improving your quality of hire 
• Boosting employee retention rates

Use the SMART method to build your wellness stipend goals, ensuring they’re Specific, Measurable, Attainable, Relevant, and Timely. 

4. Benchmark your program against competitors 

If recruitment and retention are two of your top priorities, it’s essential to check out what competitor employers are offering. 

Our Benepass Benefits Benchmarking Guide takes the legwork out of the research. Download it to understand how companies approach wellness stipends. The guide includes a deep dive into the following industries:

• Tech
• Healthcare and life sciences
• Retail
• Financial services

5. Ensure program accessibility and inclusivity 

Personalization is a strong theme in the current benefits space. You can’t expect a 59-year-old male approaching retirement to have the same wellness experience as a 29-year-old female keen to start a family. 

Make your program accessible and inclusive to all by providing flexibility in your benefits package. Wellness spending accounts are key to improving employee wellness by offering eligible expense categories covering a range of physical and psychological health activities. Employees can choose the wellness benefits that make the most sense to them. 

6. Communicate your wellness program to employees 

Review the delivery of your benefits, and check that your employees understand how your wellness stipend works and the value it provides. Explain your program’s tax implications, and check they know how to access additional information if needed. 

Finally, communicate the importance of wellness and the resources available to employees. This will motivate your employees to take advantage of their benefits, ultimately improving employee engagement and satisfaction. 

For a deeper look at setting up a flexible stipend, including program design tips, vendor checklists, and ROI calculations, download our eBook Launching a Competitive Lifestyle Spending Account: 7 Steps for Success.

Support your employees holistically with Benepass

Wellness stipends are a flexible way to care for your employees’ health and well-being. By doing so, you're supporting your individual workers and setting your business up for success by creating an environment where they’ll thrive.

Benepass makes it easy to nurture a supportive culture with our stress-free benefits platform. Implement your well-being program and give employees access to numerous categories to cover their personalized wellness expenses. Most companies choose to set up a wellness stipend through a taxable lifestyle spending account that Benepass can create in four easy steps:

• Choose your program: Design your wellness stipend by setting the amount and eligible spend categories. 
• Implement your policy: We set up your personalized benefit policy and send your employees Visa cards.
• Connect to payroll: Automate enrollment by connecting your payroll system.‍
• Join the Benepass platform: Invite your employees to start spending their wellness stipend.

Ready to give employee health and wellness a much-needed boost? Book a demo of Benepass today or contact sales@getbenepass.com to connect with a benefits specialist. 

Health and wellness stipends FAQ

What are the biggest challenges in implementing a wellness stipend program?

The biggest challenges when designing and rolling out a wellness stipend program include: 

• Budgeting and allocation: Striking the right balance between generosity and sustainability is key, especially as wellness stipends often fall within the broader benefits budget alongside health insurance, retirement, and mandatory benefits.
• Program inclusivity and accessibility: Employers must create flexible programs that allow employees to define what “wellness” means to them. covering physical, mental, financial, and social health.
• Administrative complexity: Without the right tools, stipends can be time-consuming to manage. Tracking receipts, processing reimbursements, and maintaining compliance can overwhelm HR teams. 
• Tax implications: As wellness stipends are taxable, employers must communicate clearly with employees about how they’ll appear on paychecks and W-2 forms. Lack of clarity here can cause confusion or reduce the perceived value of the benefit. 
• Employee awareness and engagement: Even the best-designed stipends will fall flat if employees don’t know about them or understand how to use them. Clear communication, examples of eligible expenses, and reminders throughout the year are essential to encourage participation.

Is a wellness stipend considered a fringe benefit? 

Yes. A wellness stipend is considered a taxable fringe benefit since it’s an additional form of compensation provided outside of regular salary.

Are health stipends reported on W2? 

Yes. Because stipends are taxable, the value of the benefit must be included in employees’ W-2 forms as part of their total compensation.

What are examples of eligible expenses? 

Eligible expenses often include fitness classes, gym memberships, meditation apps, therapy sessions, nutrition programs, alternative therapies like acupuncture or massage, and financial wellness tools such as coaching or budgeting apps.

Are wellness stipends the same as wellness benefits? 

Not exactly. Wellness stipends are flexible allowances employees can use on a range of wellness-related expenses, while wellness benefits usually refer to more traditional, employer-provided offerings like on-site gyms or EAPs (Employee Assistance Programs).

Are stipends distributed with pachecks? 

Stipends can be distributed with pay checks, yes, but this isn’t the only way to deliver them. Some employers add stipends to payroll, while others use a benefits platform or prepaid card to give employees more flexibility and easier access to funds.